welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. dignitary celebrities and world leaders are gathering in johannesburg at this hour for a nelson mandela memorial. nearly 100,000 mourners are expected to flood the stadium. president obama is among those speaking at the service. we'll bring you updates throughout the morning. meantime, on wall street, a number of speeches in recent days from policymakers before officials go into their blackout period before next week's two-die fomc meeting. that has been what the market has been digesting. yesterday, jim bullard said positive trends in the labor market make cuts to the fed's $85 billion bond buying program more likely. that is huge news because, remember, when bullard came on with us not too long ago, you talked about the how the fed could be doing this for a long period of time and he'd feel comfortable with that because we

haven't seen inflation. because investors have spent so much time tapering, investors are interested in bond yield. if you've been watching the ten-year, right now the yield is at 2.827%. also, october wholesale trade and the labor department's latest job openings and latest turnover survey that a lot of economists watch closely. futures at this hour are indicated higher, dow up by just about 20 points, s&p up over 2.5 points. and a big call today on deutsche bank. the firm says that a horde of pent up cash means that the stock party's punch bowl isn't running drooi dy anytime soon. deutsche points out shored up cash is likely to make its way

into equities in the next month. andrew, good morning. >> good morning to you, becky quick. thank you very much. we have corporate news for you this morning, as well, as joe was just mentioned. the u.s. government is now officially out of gm. they've sold their last shares of general motors. tack payer res taking a welcomed $10 billion loss into the automaker in 2009. there will be an ongoing raging debate about whether this was the right investment. in tech news this morning, texas instruments are narrowing their fourth quarter outlook. semi conductor earnings and revenue, their view on the -- they're baskracketing the consensus. the founder of lululemon is now leaving the company after that uproar of his critique of customers' bodies.

chip faced a media storm after saying in part frankly some women's bodies just don't work for the pants. shares of the up market yoga pantmaker hitting an all-time high, $81.43 back in june. it closed just over $70 yesterday. >> what did he say? >> he came out -- he's the founder of the thing and he said for some women, they don't look good in the pants. >> it's not our pants, it's your butt? >> basically that's what was being said and i didn't have to -- i was trying to not say it myself. you said it. >> couldn't you fix it? couldn't you wear spanx under the -- no. it's kind of one and the same. >> the founder said that and now he's out. >> there's a lot of things that my body is not good for. i would hate the person to say you're not suitable for that. you know what, actually?

i would want someone to tell me. andrew, if i come in here some day and -- >> you want penelope to tell you. >> hold on. now i'm going to defend this guy. there are certain types of clothes that run very skinny, there are things that run wide. i'm kind of a tall guy. there's certain clothes i can wear and you can't -- you can say that. >> i'm not arguing that. but i think as the founder of a company, you are alien indicating your customers. it's not my product, it's you. customer service 101. >> that's not like the abercrombie guys, where we only want the cool kids -- >> this is sort of like, well, we only want the hot kids. >> andrew, that collar you're wearing today stnt fit your next. >> it's an issue. >> it crosses over like this. >> i'll have to talk to my people. >> since you opened up the gate to all the criticism, i figured

i'd -- >> i know. it crosses over. >> people have to take a look at that. >> we'll talk to the fashion folks later. >> and i think a lot and i share a lot of what i think. i think the ten-year has been well behaved. >> i think people aren't expecting a taper in december. if we get it, i think the ten-year will act up more. >> maybe that's true. but i think that $10 billion, $20 billion, i don't think we care any more. >> i think you still get a knee jerk reaction. i was surprised at bullard's comments. >> and the bullard theory and maybe the today story, i don't know that it matches up quite the same. >> the other thing that i thought, which is what led me to the next thing, yesterday a lot

of on people made this point, that after the stock market is very strong in any given year, you think, wow, it can't repeat it. but whatever factors were causing the momentum to cause money to go in, a lot of times that continues and it's more than just a -- and the other thing, if you ever look at a chart of anything that's rising, any kind of commodity or stock market, it has -- every one of those, when it's a new high, it keeps hitting new highs. and people would say, wow, i can't guy it now, it hit a new high. for them to be right about it's this high, this high, this high, this high, if every one of those times you said i think this is the end of this trend, how many of those will you say it's the end of the trend until the tren starts, right? >> the problem is you might miss the opposite trend. >> but why don't you give it 10% before you jump in. mo because most of the time it's a fake to try and shake out

people that aren't that confident. until you happen for sure. >> the market doesn't recognize the calendar year. >> no. i like the deutsche bank call. what else is going on? there's a budget, they're going to do that deal. that could be huge. and they're going to do that. >> i think they are, too. paul ryan and patti murray have been really good about keeping quiet on it. they're not commenting to reporters. >> the producers have put an actual story and words that go together that tell this story. >> i'm going to say that now. >> go for it. >> the movie is coming out soon, isn't it? >> anchorman. >> i'm channeling it. as i do everything. in washington news, congressional aides say a budget deal could come today. today. >> they better hurry. they've got in the nl next friday is when the house goes to recess. >> when they go into recess it

could be a big bullish market. we need will ferrell to come and do this. >> he did it at some south dakota local station. >> is there a day you're going to be out? >> because we -- >> people have never seen the two of us in the same room. why, andrew? why do you want me out? >> i don't want you to be out. i want you to be sitting here. >> because if any of us is like him to get out, it would be me. >> i didn't say that. that's okay. >> patti murray and republican representative paul ryan are scheduled to meet today. they've been discussing what has been called an unambitious plan, but we like it. the deal would raise revenue by cutting federal employees retirement budgets and raising fees such as those paid by air travelers. they're going to double the tax on airplane tickets. >> but they call it fees instead of taxes so they think they can

swing it by. >> i heard you yesterday, you're very cheap. and your first concern about usair .american, you're sure they're going to raise it? >> i'm sure. >> they're the same prices now as when i was a teenager, basically. to go to california, it's like $400 round trip. that's whan the 70s, andrew. >> if you look at the fees on airline tickets, it's astronomical. >> but it only ads up to $400 to go to l.a. and back. >> if you want to -- oh, you mean the -- >> no, i mean the fees themselves. >> from new york to san francisco has not gone up materially. i agree with you. but if you look across the country, they have outpaced inflation by -- >> not over the past 25 years? >> no, but over the past five or ten years, yes. >> the biggest issue with conis on sole addition, you can't get direct flights to a lot of

smaller markets. in our d.c. news, lawmakers are proposing a compromised defense bill that would reduce spending on missile defense by $358 million to $9.5 billion. it would mandate an additional homeland defense radar system and increase funding for u.s. israeli cooperative efforts. leaders of the senate and house armed services committee are calling for a measure at least by the end of the year. and a new study says its stake tax revenue growth peaked earlier this year. preliminary figures softened significantly. gains in the first half of the year were led by western states, andrew. >> thank you. thank you very much. the other big news of the morning, the volcker rule. regulators are about to sign off on the volcker rule after five years. kate kelly joins us now with this story which has been a long time in the making. >> good morning to you, andrew. it's been three years since the dodd frank rule was passed, 3

1/2 and a lot over 2 years as we saw a publicly available position on this volcker rule. based on the leaks we're hearing about the big this morning within one, is there's this sort of ban on portfolio hedging. in other words, you can't make the vague assertions about the positions taking on offsetting whatever you're exposed to as a bank however reasonable ta may seem. these hedges have to be tied to quote/unquote reasonable, identifiable sets of risks. in addition, they also have to justify the positions they're taking as being needed by clients that they reasonably expect clients to need these things, either to buy them or sell them, obviously, in the near future. ceos will be expected to attest to the fact that they have compliance programs to follow the volcker rule. there's a trade on any situation tied to traders which seems like

something they would do. now, an interesting thing that is a bit of a car bout, the fact that there's going to be wider leeway in terms of treasuries and municipal bonds, essentially the government bond market somewhat protected in terms of the curbs being imposed by the volcker rule as are sovereign bond markets in other countries. so that is something that the industry may be happy about. i think it's interesting overall, because in terms of what i was being told of what to expect today, and by the way, today will be interesting because we have a federal government closure in d.c. due to snow that's expected to fall, the schools are closed, the cftc canceled their public meeting, we're standing by for more details on the fed. i'm told the rule will be voted on regardless because these agencies that need to vote today can do that through a process where they do it behind closed doors. but in any case, this leeway in the government bond market, i think, is interesting and shows you or at least based on what i'm told by sources, guys, that

the rule writers were worried about distortion of spreads in those markets if it became too difficult for banks to hedge themselves. >> i've got a couple quick questions for you. i read some of the material and talked to a couple people in d.c., as well. the thing i can't know is when they talk about a specific edge, and that's the quote, has to be specific. if i am wells fargo and i am long the housing market, right, can i now be -- can i put a hedge on the housing market or is that too broad? is that specific? >> my sense is that's too broad, andrew. and i think this whole thing, and the journal pointed this out, too, this is sort of the london whale band we're seeing here. we have 350 billion in broad exposure to the corporate sector because we're a bank and we do so much lending, therefore, we're going to take on sort of large hedging positions that are hedges on corporate credit rimp. that apparently is not going to

pass muster. however, as you know, this is a 900 plus page document. there's a lot to be seen in the interpretiveness. we'll see more how they define it. >> and one other point you made, when you talk about the sovereign to sovereign debt that u.s. banks were able to buy outside of the u.s., i'm told that the pressure that was brought to them there was not actually the banks themselves, it was actually the foreign countries who were saying, talk about our spreads in the united states and we're going to have problems. >> i can see it. i think there's a concern that that will whhappen is if banks can't raise revenue by prop trading, which was a huge revenue driver leading into the financial crisis, and if they can't hedge losses through some sort of proprietary trading, what they'll do is essentially widen spreads not by design, but just because they're not going to be willing to make as

efficient markets. we may see customers getting those costs passed on to them. and the fear was that that would affect these essential government markets. so that will be an center argument that comes out, i would think, and i think people are ready to go with lawsuits as soon as they can pars through this language and figure out what they're going to take issue with. >> kate kelly, thank you for that. stay warm and we hope to see you today. it doesn't look like it's snowing right behind you this second, but it sounds like -- >> we'll key you posted. ayman jabbers and i are here regardless of the weather. joining us at 6:30 a.m. eastern is bart chilton. and we'll continue this conversation. >> time for the globe markets. is there snow coming today? >> supposedly there's snow coming here and there's definitely snow going down there. >> schools canceled? >> not here. >> here?

>> really. i did. happy people in my house. ross westgate is standing by. >> morning, joe. >> hi, ross. go to it. you're green. you should be. >> we are. and not by much. it might be said. modestly higher this morning, joe. good morning, everybody. 6 to 4, a little bit more than that. we are up to the session highs, very good gains there. the ftse yesterday was up some 7 points and this morning moved a little bit more than that. you put the prices up, just up 10 points, around 0.2% higher for the german market. the cac 40 is up around 0.2%. good data out of france today, coming down 0.3% in the month of october. we expect to pick up another piece of data that reflects france back into. the ftse mib is up 0.25%. breaking that down by sectors today here in europe. we'll show you where the division of the split is.

we have media and it's not doing too badly. basically resources down once again. the prospect is the fed essentially tapering next week. now we've got a euro group meeting going under way today, as well, in brussels. and they are saying that they've put an agreement together to put a fund together to help close banks. there has been big discussion in europe of what happens when a bank fails, how do we wind it up? do we have a fund to do it? now, there's a proposal on the table. the problem is that the germans have been dead set against using that fund to wind up banks. so while there's a proposal which may lead to this wider banking union and the single market resolution is a key part of that, not sure or clear that the germans are going to necessarily change their position. for them, of course, it's mutualzation of debt and they run a long way away from that, as well. and ahead of there on the sidelines of that, there is some

good news. julia has been speaking to the greek finance minister who suggests that by next year or some part during next year, they should be able to reaccess the market. >> i'm very optimistic about next year. we're going to have positive growth so we can have market excess. >> and how do you continue to -- >> leading to success next year, but it will be the first time since 2010. so it is very important. >> and that would be some achievement if indeed they can manage that. as far as bond yields are concerned, treasury yields are lower this morning. we've seen lower yields in italy and spain, as well. just above this 0.4% market. still very contained. back to you guys. >> all right, ross. thanks. coming up, a commuter controversy for google. and how would you like to get a late slip for work? those stories are coming in. andrew would have a slew of them. are coming in in this morning's

executive edge. and we have a big lineup of guests coming up, ken langone, steny hoyer, norquist and the ceo of brockstone will tell us what kind of cool stuff should be under your tree this year. but before we head to break, here is the national forecast from the weather channel's alex wilson. >> the snow is going to advance closer to philly.

time now for the executive edge. a google commuter bus was blocked in san francisco for about a half an hour yesterday. protesterses were complaining an influx of technology workers has been driving up costs in the city. protesters chanted and held up signs saying things like san francisco is not for sale .stop evictions now. maybe made for some discomfort for the people on that bus. >> google scum read one notice that the -- keep catching your bus. so let me get this straight. they don't want any high tech jobs and job creators in their neighborhood? >> they do. they just want them to leave after hours and go away so that they can stay in those places. it's the same sort of gentrification you've seen in

those places. >> oh, who wants that? if you have some ridiculous yupp yuppie pc take on this -- >> i have some ridiculous pc take, which is -- >> i don't think i want to ask you this. >> no, no, do you want artists, school teachers, nurses, doctors -- >> can't we all just get along? they can't did coexist with goo people? >> they may not be able to afford to live next to. what you want? >> this is the same diblasio argument. >> no -- >> but you're so hypocritical in your ivory tower on the upper west side there. >> i am. i'm not disputing that. i'm suggesting in a perfect world, what would you want? >> and where is that? >> don't they have rent control like they do in new york city? >> they do, but -- >> do you have rent control? >> i wish i did. >> because some of the biggest

loud mouths about this are you find out -- >> boy, do i wish i had rent control. >> you would take it, too. >> no, no, i would say please, thank you ma'am, may i have another. >> we just have to embrace the technological -- >> i would be so happy if i was in san francisco or silicone valley that that's where these people decided to put their company. >> so i have some friends who have kids in school, private school in new york city. and they say, you know, do you want to go to a school where all of your kids' colleagues region you know, all work on wall street or all own hedge funds or would you want them to all come from different backgrounds because that's going to help the kids grow up in a different way or have a broader experience? it's just a question. i don't know the answer and i don't know how to get there, but i raise the question. >> is that an argument for public school? >> that is an argument for public schools, but it's a larger argument about what is city and what is life supposed to look like. now i'm going to look like a

socialist. i'm just raising the issue. >> i hear your point about making sure everybody has diverse backgrounds and i think everybody wants that for their kids. i mean, we've been grappling this for, you know, 50 years, how to make sure that everybody gets an equal education and we don't know whether we do it, we transport kids or we just improve the schools in their neighborhoods. >> i don't know the answer to any of it. >> it's tough. right. >> but i think that is -- but that's where i think this type of story comes from. that's what's going on behind the scenes. >> it certainly gets to the roots of that. guys, let me tell you about one more story. if you were late for work, the mta could come to your rescue. the transit authority could give you a note called a subway delayed verification. in other words, yes, boss, i really am telling the truth. passengers are asked to provide information like their subject lines, locations of their entries and exists. then you get this late pass you can hand over to your boss. >> andrew, this is your story. >> i've had a couple of near miss in the mornings here.

if i can have brought the note -- >> we had money on you not -- even though it was your first day back because yesterday there was some bat bad weather and we thought you were going to get your makeup on set again. which makes for a great 6:00 a.m. hour. andrew is late, watch what happens, the makeup lady comes out here, she doesn't have to draw in those eyebrows. people don't believe that because those things -- >> they're real. >> that is -- wow. every expression is -- >> gives you a little extra umph. >> i need some of that. look at these. you can't even see them. >> i can pencil them in for you. >> would you do that? keep the cameras rolling. one more story for you guys. >> really? you already said it was the last story. >> apparently we have some time. so requickly, i will tell but the real story. an article on the front page of the "wall street journal" today says companies and activists are declare ago truth in board room battles. yeah, right. both sides are finding it is easier and cheaper to negotiate

rather than risk a public side. others say the companies are becoming more receptive. traditionally, they had sided with management, but, guys, even carl icahn is saying, yeah, i've been surprised how many board seats i've gotten. >> you saw what carl says. people understand the right. people understand that the things i'm talking about are very successful and they're morons. >> who did we have -- we had a guest host recently who said you absolutely -- i would advise if the activist investor comes open up and -- >> you're right. keep your friends close and your enemies closer, exactly. >> i agree with what you said when you were talking about why they bring them in cheaper and easier. the second part is they get the support of the long-term shareholder -- >> can't we all just get along? we are. patti murray and paul ryan are getting along. >> it's nice as we head into the

holidays. when we come back, we're going to be talking about the voting on the volcker rule. bart chilton will join us. he's going to cast his vote later this morning. but first he's talking to us. and later, we are squawking dead with the host of talking dead. chris hardwick will be joining us in studio. we're all excited about this, but especially joe. also, as we head to a break, take a look at yesterday's winners and losers.

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good morning. and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. making headlines this morning, the east coast is bracing for another major winter storm. millions of americans are set for more travel chaos. the winter storms expected to dump as much as 6 inches of snow on washington, philadelphia, new york and boston. that's right up the track of the -- it must be following in a cell of the amtrak train. nearly 800 flights have been canceled in wilmington. so far this morning, toll brothers are reported fourth quarter results that beat the street by 11 cents.

revenue basically in line. the cautious comment from the ceo leading to a little bit of pressure on the stock this morning. he said demand is leveling off as interest rates creep higher. also there's political uncertainty in washington. uncertainty might be going away and, you know, 2.8 isn't going to kill anyone. >> maybe that's why the market is up. maybe it's all about washington than just the fed. >> there's a lot of good things happening. after years in the making, the volcker rule is find finally up for a vote which would bar banks from proprietary trading and strictly limit their alternative investment activity. and bart chilton, which is like -- it's tough for everyone, bart chilton, commissioner of the cftc joins us now. trying to get through this vote is going to be one of his last major acts as a commissioner before the leaves the cftc. are you going to be able to

speak without your voice wavering, bart? >> i think so. i can probably handle it. leaving government is not the worst thing in the world. >> i've got to get you one more time. have you met a regulation that you don't like, ever? >> yeah. you know my answer, too. box office futures. we shouldn't be betting on movies. that's the one and i'm holding on to it. >> that's the one you always come up with. we'll always remember that. the way this rule looks at this point, it's much tougher than a lot of people think. it's a good thing that it is. it's not going to hurt capital formation. all of it is going to be benefits. there's no downside p, in your view? >> well, you know, these things are never perfect. so there may be something that we don't anticipate. but i think it's a rigorous rules that's good, that it does exactly what the law said, joe. it stops the wild flyer betts that are just for the house. it will allow legitimate hedging activity for legitimate business

risking. but as kate kelly was saying earlier, it has to be defined what this business risk is. so i think ultimately it's going to be, you know, good for markets and there may be some complaining a little bit right now. but i think ultimately, it's going to be a really good thing. >> they're like most things, usually it goes too far and then you fix it as you see some of the unintended consequences. we had a banker on yesterday, medium size citi national out in l.a. talking about just dealing with dodd frank has been some of the provisions that were unintended in that. but that's been sort of a wet blanket in certain ways. we'll do it again, right? >> yeah. i mean, it is this balance and we talk about that a lot. but it's true. sometimes regulators are overzealous and go too far. there's been a couple of instances where maybe we've done this, but we're erring on the side of caution given a decade of deregulation between 1997 and

2007 led to the economic collapse. so if we're going to err one way or another, i think we want to err on the side of protecting the economy and protecting the consumers, right? >> but all you really got that was a result of this, you got the whale that was -- it was material to jpmorgan, but it certainly never threatened taxpayers ever. it never got close to being an issue. and then you got the financial crisis that wasn't even the commercial bank. it what the was the investment banks. so as bad as it got with all these horrible activities that they were supposedly engaged in, it wasn't even the root cause of the financial crisis. >> well, this systemic risk certainly with all of them and tlshl some wh there were some troublesome duplexities. >> what is that? >> troublesome duplexities. i'm a psychologist this morning, too. you have the banks, when they have a proprietary interest and

they bet for themselves, what they did -- and there were two major banks that did this. they encouraged their own customers to get into a fund and then the banks took the opposite side. >> who did that? >> goldman did it and citi did it. >> there were plenty of people on both sides of those trades. all they did was supply what both sides were looking for. and they were with the losing side. goldman was with the losing -- they lost $90 -- the million dollars on that. >> a federal judge fined them hundreds of millions of dollars. my guess is they probably did something wrong. >> just by getting -- paying a fine in this day and age, nobody has even admitted doing anything wrong because all they want to do is settle because they know the government has the other -- that's an assumption you can't make. >> nobody -- yeah, i don't -- >> i don't think that that advocates track -- do you feel

that that trade was not -- >> we only know john paulson's name now because he was like the only guy that really saw what was happening. those banks over in europe were crying for product. >> this wasn't average investors who were on the other side of that trade. >> no. they were guys who knew exactly what they were doing. both sides had product. all goldman did was facilitate the trade, bart. >> they created the fund, encouraged customers to get in it, they took the other side and nobody said -- >> no, they lost money. they had money on both sides of that trade. they lost money. they were with the european bhanks more than with paulson been. >> joe, is that the new standard, you only have to pay a fine if you make money? if you violate the law, you've done something wrong. it's not only if you profit from it. >> who violated -- if someone violated the law -- >> i think they paid a fine because of the marketing materials. >> and if someone violated -- he

a 29-year-old trader was the only guy that was brought to trial, right? >> they paid hundreds of millions of dollars and a fine for doing something they shouldn't have done and that was creating the fund, populating it with their own customers and then taking the or position. >> i don't buy that. that's a false narrative. >> let's be honest, the volcker rule is a very difficult issue. it relates to that, but that's a small piece of this. the question i have about this new law relates actually to the standard and what's going to happen, meaning when people talk about specific, it has to be a specific hedge, how specific that ultimately has to be. and the question i'd ask kate kelly is if i'm wells fargo and i'm long the housing market, can i make a specific hedge against the housingkets a hedge? >> you can, but it has to be comparably correlated. you can't say this is a hedge

and then you speculate. it has to have some parameters on the i wonder, this looks like it's a pretty big tool for regulators to then go back to the banks and say this doesn't work, this doesn't work, this doesn't work. if i'm a bank, it might be pretty concerned about trying to do anything because the interpretation is going to be if you decide to come after me, you can do what you want with it. >> well, there's that concern, becky. but that's why it's been so difficult, quite frankly, in writing this. because you want to take care of all these nuances. i think we've hit the right balance. so what the language says is that if you have a risk and then you want to place a hedge on that, then it has to be comparable. that it has to be roughly comparable. it's not just in the eye of the beholder. if you can prove what it is, show what it is, then that's fine. the other key thing we've added here is there's an ongoing recall bragz. so things like the london whale that kept losing and losing money, that would have to be

recalibrated. that circumstance wouldn't have happened. and the other way, if you were making lots of money on what was a hedge, but you made all sorts of money, then over time, you'd have to recalibrate that position to ensure that it remains roughly correlated with the actual risk. which makes sense. >> hey, bart, we have to go, but since you are going and leaving the department, make you can tell us some secrets. what happened in the last couple of weeks here? who is on which side of this thing? who is in the pocket of wall street, as i imagine you might think some of them were. who made a win here, who made a loss? >> all i'll say is -- >> you can burn some bridges on your way out. it's okay. >> yeah, right. i have a history of doing that. the bottom line is this thing got weaker from the time it was proposed and just before thanksgiving, i thought there was no way it could be resurrected. but i think it's righteous and rigorous regulation. how do you like that, joe?

>> um -- >> no. >> i guess you haven't had the government bring any -- a lot of those things are not settled because they're settled just to get them out of the way. that's why the language in them never says i admitted guilt. you live in a ewe taupan world where it proves that there was wrongdoing in the first place. >> people don't pay the bottom due to emaculate conception. >> try fighting an audit, bart. >> maybe i'll get a chance. >> no, i'm the one that has to issue. a big lineup kicking off at 7:00 a.m. we have ken langone, steny hoyer, grover norquist and the ceo of brookstone with some cool gifts for the holidays. as we head to a break, check out

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it is now time for the "squawk box" market planner. amazon begins shipping a 4g version of its 8.9 inch kindle fire tablet in the united states today. you can go out and get it, priced at $479. you have to click to get it. the tablet, featuring hd display, improved battery and life. watch out for the october wholesale trade and labor department's job openings and

labor turnover. and on wall street, the nyse tree lighting ceremony. the annual tradition includes live music, hot cocoa and performance of christmas carols. coming up, the feature in michael lewis's the big short. now paul is back with more insight and opportunity ahead. he joins us on set right after the break. >> announcer: coming up, can a budget deal be reached? house minority whip senny hoyer is here. rise above with "squawk box" only on cnbc. the american dream is of a better future, a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does.

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welcome back to "squawk box," with the fed signaling tapering to likely kick off in the next few months, how is the smart money playing defense with their portfolios? joining us the partner and global head of event strategies at hedge fund white box advisers. approximately $2.8 billion in assets under management. . and as we said in the tease, you're part of the big short. >> yes. >> which is always kind of cool. >> yeah, always great to bring it up, too. >> do people talk to you about that? is that now? the big short is -- has that created a halo? >> not -- i was probably the least well known person of the people involved in it. so not really.

and it was quite aways away now. kind of distant past. >> when we teased the segment, we also said tapering in the next couple of months. where are you on that? we've been debating that for a while now. >> they have to taper because they continually are buying a greater percentage of debt being created because we were creating less debt. so if they don't taper some, they're increasing the percentage they buy. it's really the degree of the taper. and our concern isn't really for the 50 basis point move in either direction. our biggest concern is if they were to somehow lose control of long-term interest rates and yet have a significant selloff. because in that dynamic, we think that it would be incredibly dislocative to markets. and dislocative to portfolios. >> odds of something like that? >> i don't think it's great. but i think it's greater than zero. and i think the biggest problem is that people think that it really can't happen. i guess tieing back to the

mortgage trade. i remember in 2006 when we were ramping up the short, i was at a security conference and i overheard a conversation between some investor and one of the rating agencies. and they asked the question, well, what happens to these mortgage bonds if the housing market declines 5%? and the answer was, well, we don't really know because that can't happen. >> ding, ding, ding. >> you know, maybe it can happen and that's really when we ramped up the trade. that was -- but i think, when you have things that people believe can't happen that do happen, that's when it's most disruptive to markets and destroy the greatest amount of wealth. >> the whole idea of the fed losing control, do you think that's more or less likely than it was six months ago? >> probably about the same. >> really? >> it's basically as you print money and i lose arguments with well-trained economists all the time.

an abnormal inflation environment, you could ask, like argentina or zimbabwe, did they ever have monetary -- was there any monetary velocity and there wasn't. it's for an abnormal inflationary type period. you don't need that. now, i don't -- i'm not predicting this is going to happen, but i think it's a risk and probably the risk to protect our portfolio against. >> and you're long municipal bonds. >> yes. >> you're like the antimeredith whitney in this case. >> yes. >> why? >> well, we are -- we are long the best credit municipal bond. we hedge out the interest rate exposure in those. it's one of the few places where you can still get rewarded for your risk. it's a price-based argument. they're too cheap. you're getting over an 8% after tax yield. you have a lot of cushion against interest rates there.

and most municipals are very solid. we're only trading for the most part in the top rated municipals. we have some university bonds that are trading, you know, at 4.8%, 4.9%, for tax, over 8% after tax. they're significantly cheap. and what happened when there was a first taper talk, municipals traded off higher than any other fixed income instrument which is odd because the fed doesn't buy any bonds. retail got out first, so we just think from a risk/reward opportunity. >> and real quick, equities. we keep making new highs. are we going to keep making new highs in 2014? >> we're a little bit more negative on equities than we've been in the past. we're fairly positive this year. >> when you say fairly positive, how were you balances? >> well, we stay pretty market neutral in our cases, but we're probably a little bit bias to the long compared to being

exactly market neutral. we're probably a little bit biased to the short now. but we're basically always have somewhat of a long bias simplicity. the only part of the equity market we really liked right now, i think, are mortgage reits. >> okay. >> and they've been huge disfavor. i think most of that's priced in and you're getting rewarded for that. >> thank you for coming in this morning. >> thank you. coming up, instead of us going to capitol hill, the hill's coming to us, steny hoyer will join us onset to take on the biggest facing washington. ken langone is all fired about what's going on in washington, wall street and everywhere else. we'll be right back. over the next 40 years

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embracing the taper or throwing a taper tantrum? is bernanke about to leave wall street with a lump of coal? that's about to keep our "squawk" market watchers very busy. >> clark, it's the gift that keeps on giving the whole year. >> our guest host is ready to play. ken langone is fired up about the economy, obama care and pension plans across the country. >> one year membership in the jelly of the month club. and dealing with unfinished business on capitol hill. steny hoyer making a rare appearance on the "squawk box" set. "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. nearly 100,000 mourners flooding the soccer stadium today for nelson mandela memorial. dignitaries and world leaders are speaking, including president obama a few minutes ago. >> he was not a bust made of marble, he was a man of flesh and blood, a son and a husband, a father and a friend. and that's why we learned so much from him and why we can learn from him still. >> a steady rain has been falling, but the crowd has been singing and dancing in celebration of mandela's life. also, in wall street news, the s&p 500 coming off another record close while the nasdaq finished at the highest level since september of 2000. investors now focusing their attention on next week's fed policy meeting and the

possibility that the fed could scale back the bond-buying program. we'll have more on that in a moment. that's why steve is here and that's the conversation around the table. the futures in the meantime are indicated slightly higher. dow futures up by about 21 points, s&p by about three points. treasury in the meantime, has sold the last of the general motor shares. that means the automaker can pay a dividend and is no longer subject to executive pay caps. with that sale, the final cost of the government's gm bailout is around $10.5 billion. and a budget deal could emerge in washington today. democratic senator patty murray and paul ryan are reportedly set to meet today and hope to finalize a budget deal. each as the head of the budget committee in the respective chambers. an agreement would avoid a january 15th government shutdown. there's a lot of hope around this deal. a small deal it may be. we're going to be talking to house minority whip steny hoyer. and then at the top of the next hour, tax crusader grover norquist.

>> oh, good, you will get a question. >> you know what i'm going to ask? >> don't tell us now. he'll get it all prepared. let's blind side him. you got a good one? >> i think so. >> we've been talking about a bullish market call from deutsche bank this morning. means that the rally can continue and suggests that the s&p will see a 10% gain early in the new year. deutsche bank estimates around $169 billion is around in pent up cash and short interest. and that's likely to make its way into equities over the next three to four months. and, i don't want to say from their lips because i don't want to say that i don't care one way or another. but it's nice. >> nice, it's lovely. some people think it's going to go down. >> some people think the fed will taper in december and some

people think -- >> they won't. >> i wish i knew someone who knew. >> well, we might have a guy who thinks he knows. >> it's impossible to know, isn't it? >> well, this guy is closer than others and his name is steve liesman and we're going to talk about the fed. >> liesman i believe. liesman i believe. >> let me warn you, folks. >> the "new york times" says one things, the other guys -- >> not going to happen. >> others say not going to happen. >> i want to warn viewers, joe is agitated this morning. at the end of this report, he's going to have a word for me. >> give the report. >> i'm going to give the report and, joe, it's your show, you take what time you need. >> burn me once, my fault, burn me twice -- >> twice. >> i take what you say as gospel and i have to -- >> gospel is a strong word. a taper by the federal reserve in the next meeting in my opinion looks more likely than not. the economic data, reaction to it and statements point to a

strong possibility the fed could move next week to reduce the amount of stimulus it provides the economy through bond purchases known as quantitative easing. the fed offered three tests and look near to being met. let's go through them one by one. confidence in the outlook. three-month average job growth now 193,000, that's up 44,000 from what the fed thought three-month average job growth was in september. it's been revised higher. the unemployment rate down by .2% since september. budget deal in the works between murray ann ryan. so less of that for a couple of years. and interest rates. the june 15th fed fund futures are down from 90 basis points on september 5th to being unchanged yesterday at 27 basis points on jobs friday. that to me is very key. the behavior of the fed funds rate tells the fed they've been successful so far in convincing the market it'll remain lower for longer and that tapering is not tightening. of course, predicting the fed the past several months for me

and many others has been a tough proposition. they defied conventional wisdom in june by announcing a taper schedule and in september by not tapering. they could wait another month so they don't think it matters a whole lot in the grand scheme of things if they start now or next month. jim bullard from st. louis yesterday talked about a small taper in december. atlanta's dennis lockhart said it should be discussed at the next meeting as did plosser. began laying the groundwork in the september 19th speech with dovish talk about how the committee can react once it hits the threshold for raising rates. >> even after unemployment drops below 6.5%, and so long as inflation remains well-behaved, the committee can be patient in seeking assurance that the labor market is sufficiently strong before considering any increase in the target for the federal fund rates. >> what the fete is trying to do

now is pivot from quantitative easing to forward guidance and guidance on rates. next week could be the beginning of that process. >> okay. so -- >> that's my report. >> you changed your mind over the last week or so. >> i went from close call to after seeing how the market reacted to the data, i think it's now over the -- >> i think i asked you before the jobs report. and you said, no, i don't think it's happening in december. i thought that same thing, too. >> and i've changed my mind. >> steve like the fed is data dependent. there have been a couple -- and i saw those comments, too, and like you before you came here, thought they were going to taper in september. and not everyone is, like the "new york times." but when was the last time? the last time there was something you were definitive and things did change. >> september, we thought there was going to be -- >> and you came back and changed it. >> yeah. >> and there was another time you thought there wouldn't be another round of quantitative easing. and then it became clear there would be and you said there will be quantitative easing. i don't want to take -- i

idolize you, you know that, and when you say something, i switch all of my thinking and commentary. and then when you flip-flop, i feel betrayed and i feel like then i have to flip-flop. >> it's gotten personal, hasn't it? i get that. i call it the way -- they give us three tests. >> will you give me a heads up? >> i will. i made an argument the three tests have been met. they look like they're close, i know they wanted to do this for a while. >> and you know what else you just mentioned? they have -- it's almost been comical watching them all on the same -- >> me? >> no, watching them all on the same page doing the, we don't need qe, we're going to do the longer at zero. someone said, look, we've got to really tell people that the forward guidance is what we're going to -- they've all had that same message. it's almost been comical. it's like, we've got it, we understand. and this would allow them. >> watching the way the market reacts has been really key. >> haven't you been gratified by the ten-year.

>> it's been nicely contained at 2.82. and i talked to jeff rosenberg yesterday from blackrock. and he says, the market is looking over the right shoulder at short rates because -- >> which market? >> fixed income market. >> okay. >> at short rates because it knows the fed wants to keep a lid on that. and over the left shoulder, both shoulders at long rates because it feels if it goes too far, the fed could act there. the fed seems to have the tentative control on both sides of the curve. >> isn't that in part because there's such a question mark in the market about what's really going to happen? for you to come out and say this and then yesterday with the times and i don't know where he stands, the market i don't think knows -- i'm not sure the market's biased one way or the other at the moment. >> i think the biased is built in here. i think if you look at the fed funds about a 66% probability of a quantitative easing. >> and i think the market, stock market believes you and i think it's rallying anyway.

we finally gotten to the point where it's the economy. >> i know the fed feels like. >> the economy, not the taper. >> the fed feels like the progress it has gained in convincing the market about tapering, not tightening has been hard-earned, but they think they've earned it at this point. >> and the underlying economy looks better. >> i want to introduce our guest host right now because i want his comments on this. ken langone is here, the co-founder of home depot. ken? >> where is your factor of the consumer's confidence in all these numbers? >> i think -- >> because, frankly, frankly it's tepid at best. >> right. confidence is tepid but it's also tentative in the sense that it's something that can change quickly. what we see, ken, is growing household wealth. what we don't have is a propensity on the part of the consumer to spend that money and the confidence to spend it and/or to borrow. we still seem to be in a deleveraging thing. in a deleveraging phase right

now. but if the consumers have the wealth, then you can have the confidence to spend it over t e time. the connection between confidence and spending, ken, is very tentative. sometimes like after 9/11 is my favorite example, i would say it's a terrible example. confidence plunged after 9/11, they sold more cars than they've ever sold after 9/11. so the connection is very -- is very tentative. >> i give auto industry a pass because the age of the cars on the road -- for instance, i own a full-service truck leasing business. we deferred purchases of new equipment in '08, '09, and '10, our maintenance costs went like that. i was talking to robert sanchez yesterday, same thing. they realize -- and now we're buying a lot of equipment because the cost of maintaining the old equipment -- and this is not unlike the owner of a personal car. i think they say tepid to what

was the word you used? tentative? come on. those aren't economic terms, those are adjectives. what i'm saying is, look, i'm bullish, i'm excited about the next five years for a lot of reasons other than what the fed does. but i really believe that the consumer is a lot smarter than most of us are because they have to live every week with the bills and the obligations they have. >> so they're smarter and see something that maybe the rest of us don't -- >> not so much they don't see something that bothers them, but they're saying to themselves with this mess in washington, i'm thrilled you're going to have congressman stoyer on. >> if you get a budget deal, even if it's a small budget deal, gets us through the next couple of years, how much of the

uncertainty does that clean out? >> this is who you want to put to work, they're in the age where they're spending more, buying homes, buying cars. >> are you making an argument for the fed not to taper? >> no, i don't think tapering matters because there's no demand for money. i kind of think that there's not going to be much of a change. corporate balance sheets are in great shape. >> well, the fed has talked about the waning influence and the waning ability for qe to really make much of a move. it's not as effective as it was. >> absolutely. look, look, give the consumer credit for one thing, they're the people you want to read about. okay. they're the people that ultimately drive where we're going. >> we should change there and all the consumer talk to she. that's the people that know what they're talking about say she because most of the consumption is not done by us. >> you talking about men? >> you're a sexist. >> no, i'm saying that when we

have retailers in here -- they always say she because that's with their stores, that's who's doing the spending. >> i understand. >> i'm the one who is politically correct. you're not. and you -- do you have any idea how much it would be? all you're telling us -- >> i learned long ago in college to go to plural. >> how much would it be? $20 billion -- >> i think ten. i think it's ten, but i think they melee out a schedule, by the way of how they do this. >> really? >> there's some support. wrote about this on monday for the fed going with the idea that plosser broke on our air, something of a cap to this thing and saying this is how much we're going to do this year. >> also got to wait for bernanke to lock in a legacy. >> you know, i think bernanke wanted to have been done by now. but i don't think he feels like having -- being in a situation of not being done that he needs to rush this or do this any faster. >> what i can't figure out is how significantly things have

changed. a month ago, bullard was on the set and, look, we can go a long time and not change anything because we don't see any inflation. i'm comfortable with that. >> i think that's right. but what i didn't appreciate is how much the fed was spooked in the summer -- >> by the move in the ten-year. >> the long end was, you know, that's going to fluctuate around. but if the short end is moving, it shows they don't believe us. keeping rates low for a while. wasn't so much the stock market, it was more -- and watching if you show -- look at the two-year. watch how well-behaved that's been, which is in the horizon of their promise to keep rates low. that's the thing that gives them confidence to move here. you see that spike right there in september, all the way up. that says we don't believe you, fed, now at 31 basis points says, you know what, in the horizon, that the fed is talking about, i can see the rates remaining low from the federal reserve. >> ken admitted he doesn't buy anything except jets.

he buys jets. anything up to a jet is a she. >> my wife reminds me that i do more in one purchase than she does -- >> that is true. all right. coming up, could a controlled -- could a -- you were just hear and now i have to read this. can a controlled taper turn into a panic taper? we spark up a debate which has been sparked with our market watchers. plus steny hoyer of maryland is going to be joining us to talk about the budget and all the unfinished business on capitol hill. and later, the return of the "squawking dead." remember our halloween show? we've got chris hardwick, host of "the talking dead" and comedy central's "at midnight," almost like a game show about social media. really cool. and we're going to talk about zombie, going to talk about nerdists and a lot of stuff with chris. every day we're working to be an even better company -

and to keep our commitments. and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger.

welcome back to "squawk." coming up, a taper tantrum or are the markets ready to embrace change? we're going to set up that discussion next. get a leg up on the trading day with the morning squawk news letter. go to our show page and sign up

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fed and the taper whether it happens in december. joining us now is jim paulson. he wants it to. chief investment strategist at wells capital management. and dr. phil is portfolio manager and chief investment officer -- oh, no, it's neil hennessy. oh, i had some problems i was going to bring to you. it's not -- he has the most popular show on tv, dr. phil, did you know that? >> issues -- >> what did he say? >> good line. >> we're going to have to settle for neil. he's the chief investment officer at hennessy funds. you are jonesing for a taper so bad, you wish they'd end the whole thing this month, don't you? >> i always hope they'd end it a lot sooner already, joe. i really think if we have a controlled methodical linear taper that the fed suggests that the market's going to be fine with that. it's been well-communicated. i think they're ready for it in

september showing all signs it's going to be fine. the problem is, i think it might start out a controlled taper, but i think it might turn into more of a panic taper. and the difference would be if money supply of velocity turns up, then you cannot any longer have a slow major taper. it's going to have to be done rather quickly. and i think that might happen next year. what might turn out to be okay at the start might turn into a little more volatile as the year progresses. that's what i kind of suspect. >> what you just said, you're right. we were so ready for it. and then they didn't do it because of the, you know, the prospect of the government shutdown, supposedly. and because of the action in some of the money markets. and now both of those things, maybe we get a deal and the fed funds rate. if they were going to do it then, they should definitely -- i don't know what the "new york times" -- you know what, krugman, krugman wants them to stay at $85 billion. >> i don't know how -- >> i just read him. i mean, again, i read the first

paragraph before i can't read anymore. i just read him. he doesn't want any stimulus cutback. neil, what do you think? >> i don't think i agree with mr. langone. you really -- you have to separate out washington, the economy and what the companies are doing. and when i just look at the numbers and look at what companies are doing, they're initiating dividends, raising dividends, doing stock buybacks. they're making acquisition. this is all very, very good for the market and going forward. and i'm looking for the dow jones over the next three to five years to go to 20,000. people are saying that's kind of crazy, but that's only 5% a year. and if you add in dividends, talking in five years, 40% on your money. >> i didn't hear. what do you mean? you agree with ken, the consumer's not -- ken sort of thinks they're a little tepid in terms of -- if you were -- >> i agree with ken from the standpoint that tapering doesn't make a bit of difference to me.

i mean, everybody knows they're going to taper. it's not like it's going to be a surprise. the bottom line is, look at the amount of money sitting on the sidelines. u.s. fixed income mutual funds, there's $3.4 trillion and $2.7 trillion in money market funds virtually earning nothing. at some point in time, that has to move. and it will move into the equity markets, especially if rates happen to go up and people start getting their quarterly and monthly statements and finding their fixed income products, investments are down. >> you know something, neil, i don't think people get. forget about liquidity, you give business a friendlier environment than it has right now, including cleaning up some of these absurd regulations. and you watch and see where the money will go. it'll go into plants, it'll go into technology, it'll go into modernization. it's incredible what business will do if it's encouraged to be

successful instead of punished for being successful. >> that's what paulsen said. we're out of time somehow, but that's why you think the velocity's going to increase and we might get a panic taper. >> yeah. i'd just say, joe, real quick, the history of changes in fed policy really all public policy is never rarely done in a controlled linear fashion. they're generally monetary boat is turned in policy hard left or hard right under panic conditions. and i think that's what probably is the way that this monetary program's going to change, as well. the last great example was '87 where velocity finally bottomed in the first quarter of '87 picked up. the market initially rallied hard and corrected hard because people realized velocity started to improve. >> correct it hard. 87, yeah, that's one way of what it was called. a corrected hard. we've got to leave it there. neil, you're not on later. no, i'm confused.

anyway, see you later. thank you. up next, using big data in the wild. how hp has created an early warning system for endangered species and possible environmental threats. and a special guest in the next half hour, steny hoyer will join us on the set. we'll tackle the budget, obama care and the minimum wage debate. but there are no branche? 24/7. i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank. a better way to save. ally bank. your money needs an ally. impact wool exports from new zealand, textile production in spain,

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welcome back to "squawk box" this morning. in the headlines, lululemon will have a new chief executive come january. joining lululemon, and founder chip wilson will be stepping down as nonexecutive chairman. lululemon embroiled in a controversy of the recall of the black yoga pants. they were too sheer for joe. no, actually, what was going on -- i don't do yoga, i can't touch my toes, it's a problem. but the real issue was that wilson found himself in pretty hot water over comments. you know about this, ken. that apparently he said customers' body shapes were to

blame, not the pants. we'll talk more about what that all means with the lululemon retail analyst. >> women's butts were too big is what he really said. >> thank you for that. >> you can't touch your toes? >> if i bend my knees. >> you said you couldn't touch your -- can't you do this? >> straighten your knee, then touch it. >> you didn't say that. >> you going to do downward dog later? >> oh, you know what it is, don't you? >> downward facing -- >> downward dog's a totally different thing, sorkin. that's a totally -- man, oh, man, don't go there. >> this squawkward moment has been brought to you by andrew ross sorkin. >> as we move on -- >> have you heard of that? >> thank you, excuse me. toll brothers, its earnings and revenue beat, street estimates for the latest quarter -- you can't start barking like that. but the company says demand has

been leveling off because of higher interest rates and because of political discord in washington. >> you're negative today. >> no, i'm not. >> and also, we should note a winter storm disrupting planned events in washington today. we heard a little bit about this at 6:30. but the cftc has canceled the public portion of its meeting on the volcker rule. it's possible the commission will still vote behind closed doors to approve it. and the ntsb has postponed the schedule hearing on the july crash of a flight in san francisco. people were taking pictures of it, posting it on twitter when they landed or crashed, rather. now set for tomorrow. >> all right. >> it's depending on the too much -- depending on the plane flying itself all the time. it'd be nice to have a pilot up there. otherwise -- >> this is a larger issue. >> all right. big data is revolutionizing the way that companies are analyzing their information.

hewlett-packard is playing a key role in this transformation. and joining us right now from the discover conference in barcelona is carl mahoney. and i know you have an announcement today with hp where you're talking about a deal, a partnership that's created the first of its kind early warning system for threatened species. that sounds like a really huge problem. and i'm just wondering, is this for real? >> it is absolutely for real. and good morning, becky, great to be back on the show. thank you for having me. we are tremendously excited about this project. i think you often hear about big data. and sometimes it's hard to really put it into reality. and so what this project is and this partnership that we've done with conservation international on the earth project is to set up cameras and thousands of different trap locations throughout primarily rain forest regions in africa and south america. we're collecting not only

imagery data, but also combining that with information about climate change, temperatures, humidity. and trying to, number one, set a baseline for where we are. our ceo meg always says, if you can't measure it, you can't fix it. so step one, let's set a baseline. let's figure out where we are with all different types of species, whether they're plants or animals, measure those and continue to measure those so we can create this trend line and try to intervene as fast as we can. it's about near realtime analysis and analytics so we cannot only see the data and analyze it, but most importantly, we can act on it. and whether you're a business or the environment or a person with your own health, this type of analysis and intervention is really critical and to us that's really what big data's all about. >> so this is just being announced. i take it it's been created but not rolled out and so you can't see what species are endangered at this point just yet?

>> no, it absolutely has been rolled out. all the information is publicly available. you can see it on the conservation international website. we've got demos going here at the hp discover show behind me in barcelona, spain, right now. we've got interactive touch screens where you can actually see photos of the animals, drill down by seeing how they're doing, how many species have been seeing. you can see the photos and imagery coming through. it's live. >> we know that hp has been doing very well recently, better than the market had been participating, better than analysts had been anticipating. i wonder big data, what kind of a role it has played in that. >> well, i think it plays a big role. i think big data is one of those areas that really lets hp shine. people don't want to hear the bits and bites. and last time i was on we talked about terabytes. we talk about this new style of i.t. cloud, mobility, security, and

it's big data, it's about the solution, and very few companies can do what we do. take the conservation international example. we went from tablets to the cloud to our servers to our software and professional services. we didn't talk about any one individual product. but we talked about, here's our solution. and big data's something that just says come help us, hp. come help us focus on our problem and solve it for us. so i think it has played a big part in our rally and in all the innovation and all the things we're doing here at hp. >> i want to thank you very much for your time today. we appreciate it. >> all right. coming up, another -- it's going to snow again. it's another wintery mix headed for the east coast today. >> school closings, right. >> yeah, the latest forecast in a few minutes. and a reminder, you can get a leg up on the trading day with

the morning squawk. what did you say? a downward dog. is that a yoga position? >> downward facing dog is what the yoga position. >> is it called downward facing dog? not downward dog, that's -- >> i don't know. i'm not -- >> is that a freudian slip. >> it's downward facing dog. >> go to our squawk page at cnbc.com and sign up now. it's the snapshot of today's top story. i look up in the dictionary whether anything means anything and apparently, i don't know, maybe you didn't know. economic earnings news, guests and some fun water cooler stories which we'll be squawking about all morning long. sign up and get morning squawk delivered to your inbox every weekday morning and never miss a beat of your favorite morning business show and this is why. coming up, can a budget deal be reached? steny hoyer is here.

plus, anti-tax activist grover norquist. rise above with "squawk box" only on cnbc. it's estimated that 30% of the traffic in a city is caused by people looking for parking. that's remarkable that so much energy is, is wasted.

streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then there's a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. the collaboration with citi was important for providing us the necessary financing; allow this small start-up to go provide a service to municipalities. citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. so the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge.

welcome back to "squawk." in global headlines, we are continuing to watch the situation in ukraine. last night, police began dismantling barricades in front of the government buildings there. local reports say special forces lining up forced the protesters to retreat. no clashes, though, were reported. computer security firm is reporting that chinese hackers have eavesdropped on the computers of five european foreign ministries before last september's g-20 summit. the meeting was dominated by the syrian crisis. and the hackers had infiltrated the networks by sending e-mails to staff containing tainted files. when recipients opened those documents, they loaded, apparently, malicious code right on their personal computers. becky. up next, we're going to talk more about leadership on "squawk box." steny hoyer joins us here on the set. we'll talk about the budget, health care, minimum wage and much more. "squawk" will be right back. every day we're working to be an even better company -

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budget negotiators are hoping to complete a deal that would fund the government for the next two yearsme. joining us now steny hoyer. democratic congressman from maryland. and once a leader, always a leader. easy for me to remember. i can't call you whip hoyer, can i? it's leader. >> leader works for me. those were the good old days. >> not to return any time soon. no. >> joe, you're such a cynic and such a pessimist. >> you better keep your eyen on the senate at this point. this deal -- can you say that? you don't like the deal. >> i don't like the deal i've heard about but there is no deal. >> but the one we've heard about, read about. >> but the fact of the matter is, chris van hollen has not been in any of these negotiations, nor have any of the other. it's been senator murray and congressman ryan. so really, nobody knows what the parameters of alleged agreement

or deal is. what we do know is this morning i read in the paper where heritage action and other conservative members of the republican party are saying we don't like the deal that they hear about because it involves some additional revenues and some modification of the sequester which is irrational and undoable. >> how many guys is that? >> well, they had 144 people voting against opening up government. >> they won't have that many this time, though? >> probably not. but the answer is, i don't know, i'm not counting votes. >> if you had guys like you on your side and guys like them. this is not a done deal. we're counting on this being a done deal and the fed tapering because this is a done deal. >> well, the last time the fed tapered, you said they were tapering, the stock market -- you and i had that discussion. the fact is -- >> it went up, now it's been going up on the good jobs number.

some people think the economy can handle being passed the baton at the fed. you don't agree with that? would you like the fed to continue at $85 billion a month? >> no, i think all of us would like to see the economy growing better and the fed back off on the quantitative easing. i think everybody would like that to be the case. the policy perceived by the congress and administration has not allowed the fed to do that. >> we're talking about more jobs, healthier economy. do you think two questions for you, do you think, possibly overregulation could be a serious problem with businessmen like me saying i'll put my money into passive assets. 370,000 employees. we've created jobs, we know how to create jobs. my partner is very involved in

the job creation council. do you people ever take a step back and say, hey, wait a minute, i don't see humor in my question. you share with me, i'll laugh with you. >> you people, oversimplification. >> let me make it simpler, i've got a more basic question. and i've asked john boehner and eric cantor this question, so it's bipartisan. do you people in congress, do you really care how the american people think of you? >> of course. >> so what are you doing about it? >> we have deep differences of opinion as you've seen, ken. >> you don't argue with a poll. >> first of all, the reason i was laughing a the you people. the simplification of all members of congress are the same. you people or them -- >> you're the good guys -- >> watch it closely enough -- >> you're the good guys and they're the bad guys. >> i thought he meant democrats. >> that's what i thought.

>> that's what i thought he meant. >> all you mentioned was -- >> look, i'm an avowed republican, but i'm more a american than i am a republican. >> we should all be that. >> exactly. >> and you know what, that's not what we're seeing, we're seeing pettiness, arguing. >> i agree with that. >> okay. i'm asking you this question. i think you ought to get all leaders from both parties in the same room and say the public approval rating is 11%. i know in my industry if we felt the public was -- felt that way about us as retailers, i'd go in a room and say, not just home depot, macy's, i'd say, guys, we've got to do something about this. >> and frankly -- >> do you have those meetings? >> sure, we do. in fact, i've had a meeting with five republicans and five democrats for 2 1/2 years, ended up with a letter with signatures of 100 people which said if the

super committee came out with a deal, we would help pass that deal. why didn't they come out with a deal? it's very difficult as you've seen. i think the congress' performance is dismal. and to that extent, i think you're right, the american public holds us all accountable for it. i don't think all of us are equally responsible. there are some people who are ideologically committed to a particular point of view. that's when i say 144 republicans voted against opening up government. that made no sense for you or the american people. >> let me ask you -- >> 198 democrats voted to open up government. >> let me ask you this question. >> sure. >> there are extremists on the republican party and if you want me to throw out a name, i will. how about you throw out a name of an extremist. >> i don't think there are extremists -- >> what more can i say? congressman, i'm very concerned about the opinion of the american people. >> the opinion of the american

people, with all due respect is. yes, there is one party now who has 50 or 60 members in the congress of the united states and heritage action and club for growth who do not want to see compromise. and they've made that very clear. and as a result, we haven't gotten compromise. now, the 198 democrats that voted for the deal that kept government open now that -- now you're ignoring me and say -- >> i'm listening to every word you're saying. >> most of those people did not agree with the number, becky and i -- this little argument. won't you compromise. we took the republican number of sequester, we didn't like that number. but we also understood you've got to move the government forward. and so we voted for that number, notwithstanding that, and everybody voted for it no matter how much they hated it because they thought that was the right thing to do. so to that extent, there were no extremists. are there some more liberal and conservative in my party? there absolutely is.

i've been at this business a long time, and i'll tell you, nobody in my caucus, unlike john boehner, nobody in my caucus i can't go to and say, look, this is not perfect, you don't like it, but this is the deal. 198, not a democrat who voted against a number they did not like because they thought it was the right thing to do. and let me give you a different example. you're in the business community. >> yes, sir. >> i don't know what you thought about the temporary -- the troubled asset relief program that george bush, hank paulson asked us to pass. >> i have no problem with that. >> you didn't have any problem with it, but 2/3 of george bush's party had a problem with it. >> you're making my point right now. >> i don't think i am. >> your argument about the whole collective body being in low regard. you've taken it now to a partisan issue. i think -- i know if i want to make a deal with a guy -- >> this is the most partisan congress in which i've served and i've been there a long time.

>> explain one thing to me. and i don't want to make it partisan. i really don't. i mean when i say, i put that pin on every morning. i say grandma, and grandpa, thanks for coming to america. not for making me a republican. with all due respect, sir, i love this country and i think all of you love this country. but in the meantime, why can't you -- somebody make an effort to say, look, what are we going to do about the low regard our voters for us? >> well, some of us -- >> you've converted this into 198, we were here, they were there, this gets you right back to where we started from. >> facts make a difference. accountability ought to be held to those who are not cooperating and understanding -- newt gingrich understood this. newt gingrich talked to his perfectionist caucus in 1997 when he made a deal with bill clinton. and a lot of people in his party didn't disagree with it. conservative element,

ironically, and he said to them, look, i want to talk to my perfectionist caucus people. the american people elected -- >> i have one more thing. >> the senate that disagreed. and we've got to cooperate and make it -- >> facts matter? >> facts do matter. >> you guys lost control of the house three years ago, four years ago. >> yep. >> that would make me take a step back and say what do i have to do to get back to being where i want to be? you said, well, you called him the whip instead of the majority leader. i listened to every word here. yours too. every word. >> steny, one thing i've always thought is things don't -- >> can i say something? >> please. >> elections make a difference. we had an election more recently than 2010 in 2012. president obama won. what were the two issues in that? taxes and health care. it made no difference. >> if you do -- i know you don't -- but you know that obama care's at 57%.

>> forget it. >> if that was the issue, it was just obama care, you wouldn't have gotten 51%. but what elected -- what spawned the tea party, what spawned that 2010 route was the way the democrats passed obama care where you took 20% of the economy without a single republican vote. you even lost ted kennedy's seat in the process as it was happening, had to do reconciliation. it was ugly, that's why we're sitting here in this poisonous atmosphere. and look what we're dealing with with obama care. do you think you should have done it that way? >> but the fact of the matter is, we were also in the deepest recession anyone here has experienced. >> can i ask one question? >> which leads to anger and fear and reaction against all of those that they felt responsible had to put them in that trick bag. >> we are up against a hard break with the commercial.

but, leader, would you stay for the next break so we can talk a little bit more? >> sure. i'm enjoying this conversation. by the way, when we leave this, going to say hoyer was right. >> we have more of a great lineup. up next, we also have anti-tax activist grover norquist. he'll be joining us after. we're going to finish our conversation with leader hoyer first and then we'll talk about that. also, the world of gifts and gadgets. we'll talk to the ceo of brookstone. plus, chris hardwick, the host of "the talking dead" is going to join us to talk about social media. (vo) you are a business pro.

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hurry, this offer ends january 2nd. visit vwdealer.com today welcome back, everybody. we are joined again by house minority whip steny hoyer from maryland. and leader hoyer, we talked a little bit about what you didn't like. and the reports we've heard of this budget deal being worked out right now. this potential budget deal that was obviously just being done right now between paul ryan and patty murray. what would you like? what would be a deal that would be something you could take? >> as you know, i want a big deal. i want something that does this for ten years. we need to deal with taxes, we need to deal with regulations. we need to make it in america.

we need to manufacture things in america. we need to grow our economy and grow jobs. we need to be focused on jobs. there's so much on the agenda we haven't done. and we're talking about a very small nick in what we ought to be doing. i think that's not -- the congress ought to be better than that. we ought not to be dealing in small -- we need to give confidence to our community and people and we need to get our country on a fiscally sustainable path long-term. not in months. >> the way you get there and the way he gets there are different. and that's the issue. >> you said regulation, we need to focus more or less? >> less. >> thank god. >> the fact of the matter is that every bipartisan commission. you said the way i would get there, simpson/bowles, bipartisan. >> absolutely. >> gang of six, bipartisan. >> can you get the rest of your party there? >> i can get enough of them, more than half, yes. >> can you get your guys going? you're not a d.c. man.

>> i'm not the most popular guy in washington because i tell -- i talk to these people the way i talk to them because i'm an american not -- >> you've got to stop talking about these people. >> 435 people, believe me -- >> the american people think of you all the same. >> i agree. but they don't have as much information as you have. >> simpson/bowles was the president's commission. what happened to it? >> who's got a long-term balanced provision on the table? the president of the united states. >> it wasn't exactly simpson/bowles. >> it was not simpson/bowles. >> and he's one of you people. that he's talking about. >> i have -- >> you said it was far from what he adopted was entitlement reform. revenues and cuts in spending. so when you say it was far from simpson/bowles, that was accurate. but it was certainly consistent with his discussion -- >> why not take it just the way

it was? you could have done it, the republicans probably could've done it. >> the republicans, who walked away from simpson/bowles? >> i know, that's because of obama care. you still got 12 or something or 13. >> they walked away. >> because of obama care. that's what ryan said, he came in and told us. >> everything's about obama care. they ought to get off this -- >> let's get off it, please. >> yeah. >> i have a question. right now, and you -- i would love for you to sit down with two people. stan druckenmiller about generational theft. children aren't born yet. >> i talk about that all the time. >> you know what, here's an effort where we can make it together. let's get out to all these colleges because you know and i know if you energize these kids and you're going to vote on an entitlement bill. you've got a bunch of people trying to vote you out of office. we all know one thing, the first

thing that matters down here is getting reelected. >> what i've told my caucus, you cannot govern a great country like america in a 24-month cycle. >> i agree with you. >> you can't do it, you're going to take long-term risk, long-term view. that's why the budget deal's so bad. let me tell you something, we have unemployment insurance to talk about. we go out this week. 1.3 million people going to go off unemployment and won't be able to buy any products or food or anything of that nature. we ought to pass that. immigration reform, comprehensive immigration reform is good for business. >> absolutely. >> we're not dealing with that. the senate passed a 68 -- >> i'm getting you, working on you. >> you're not -- see, i'm covering my half. >> earlier about regulations and taxes and all that. was that cater to cnbc's audience? we loved hearing that. we never -- >> i'm a big make it in america person. i want to expand manufacturing. i've talked about that all the

time. we needed it with taxes, regulations, and we need to deal with getting our country on a fiscally sustainable path. we won't be going to the precipice of debt limit every six months or eight months, we won't be going to the precipice of not funding government. we'll have a stability in the government. the fact of the matter is, sgr, the reimbursements of docs for medicare. >> it shouldn't be an issue. >> two days, three days left to go in this session. very frankly, if i were the majority leader, i'd be ashamed we had this much on the table with three days to go. that leads to inability in our country. >> grover's coming on. >> i hate to miss grover. grover's for a balanced deal, i know. >> when you get a chance to watch me and him, you'll understand i'm bipartisan. >> you go after all of us. >> absolutely. >> let me tell you what i tell the press. they say they're 9%, 10%, 11% of the people that think congress

is worth a darn. i say, i want to find those 10% and tell them what's going on. >> if stan and jeff come down, these are numbers, hard numbers and understand what's happening specifically. i think it would be illuminating for you all to understand why we need entitlement reform badly. >> they don't need to convince me. for the last 2 1/2 years, right, becky? >> this has been a message very consistent on. we appreciate it. >> i'm glad i came on your program. >> you're the guest. >> steny, thank you very much for joining us and spending extra time with us. >> appreciate it very much. >> again, steny hoyer. let's continue this conversation. joining us now is grover norquist. grover, i'm sure that you heard a lot of this conversation that we've been having. we've been talking about this potential deal that could be there with senator patty murray and with congressman paul ryan. obviously, we don't have a lot of details on this.

what do you think about the proposal? >> what's important is we maintain the sequester. patty murray, the democrat, head of budget committee from the senate side. her opening request was $1.4 trillion in higher taxes. no spending cuts and breaking the sequester so we could spend into the future beyond what the president promised. and when he proposed and agreed to the sequester. so that was a democrat party's negotiating position. paul ryan's position was, first of all, paul ryan is the only person in congress and the republicans endorse his position who has actually written down a budget. you let him get away with seeing, the president had a budget. really, can we see it written down? is it in legislative form? no, it's not. it's in talking points and the only numbers are the page numbers. it would be nice if the president would put some effort into putting together a budget that does all the things hoyer talked about or hoyer could do it.

paul ryan's budget actually fixes the entitlements, fixes the welfare programs, the means tested welfare programs, 185 of them around the country so that we remain at 20% of gdp eaten by the government not drift up to 40% which is what happens if nothing is done. the ryan plan's been voted on by every single republican, house, and senate. there is a plan written down to do the long-term reforms you're talking about. >> what about the specifics of the deal? what we've heard so far are additional fees that would be raised by putting fees on airlines. would you be okay with something like that? >> okay. the best thing they should do. and again, i've not seen the plan. the key thing i know they're doing and this is the line in the sand that ryan put. we're not raising taxes. they may do some user fees, i would prefer not to. i think that's not the way to go. needs to come out of spending. and second, they maintain the sequester savings over the decade. the democrats want to break the sequester, they can spend more.

this deal will keep the sequester for the next decade. it's the only fiscal discipline that we have in this country is the sequester. and the president and democrats are trying to break it. so if the sequester has some give but no break, if it's a choke collar that's been loosened, not removed, then we're in okay shape. >> that's important. let's talk about this. i wasn't sure where you were going to come down on this. the idea of user fees, not something you prefer, but you're not going to go back to the congressmen and say that's a violation of it. >> you really have to look at exactly what you're doing. it's possible it could be okay. it's certainly not preferable. i would support any effort to replace any user fee revenue with actual spending restraint. >> but if this is what we've said, if the sequester is not broken. if you're still looking at savings over ten years and even if there's some user fees along the way, this is okay. sounds like there's the

potential for a deal that you and many of the congressmen have signed on would go along with this. does it feel like this is a deal that might get done that we might have something in place before the holidays or january 15th? >> without having seen it, paul ryan is the most serious budget guy, maybe the only full-time serious budget guy in congress. he understands the importance of maintaining the sequester spending restraint. and that's the whole thing that patty murray and the president have been trying to break ever since they agreed to it in 2011. they don't like it. it was their idea but they don't like it, don't want to live with that spending restraint. if we maintain that spending restraint, it allows us to buy time to keep ten years of that -- and that's $1.2 trillion in reduced spending that's locked in by law. >> it's essentially locked in by law of the next two years. this would be a year that would get us through another election

cycle. the sequester -- but they could go back and re-talk about some of these points. essentially a budget deal to get us through the next two years. >> if it gets us through the next two years because of the trough they have in it, it actually makes the sequester much more defensible moving forward. so it's not just about two years. if we get this -- if this works okay and it's really spending restraint and -- no income -- there are not going to be any income taxes in this, paul ryan wouldn't tolerate that and the republican caucus wouldn't tolerate that. we get through these two years, the pressure's from some -- there are some republicans who chafe. the good news, is the establishment republicans, they're very good on spending restraint. it's some of those appropriators who haven't yet learned that the old spending ways have come to an end. >> thank you very much for joining us today.

>> thank you. >> what a conversation this morning. coming up, we're going to talk about the wintery weather headed to the east coast. then later, "squawking dead," and the new show at midnight, joining us live in studio. still to come -- what's on joe, becky and andrew's wish list? >> sleep. >> world peace is on my wish list, oh, yeah, and an iphone. >> a little jet. honda jet, it doesn't have a bathroom, that's fine. >> we see if brookstone has what they're looking for. "squawk" goes shopping. the company's ceo right after the break. it's estimated that 30% of the traffic in a city

is caused by people looking for parking. that's remarkable that so much energy is, is wasted. streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then there's a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. the collaboration with citi was important for providing us the necessary financing; allow this small start-up to go provide a service to municipalities. citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally,

citi is there every step of the way. so the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge.

welcome back to "squawk box." picking headlines, despite a snow-induced government shutdown in washington today, earlier on "squawk box," bart chilton said it needed to protect consumers and the economy. >> it stops the wild flyer bets that are just for the house. it will allow legitimate hedging

activity for legitimate business risk. >> as expected, chilton says the rule is not expected to be implemented before 2015. in economic news, a new survey finding that small business optimism edged a little bit higher last month. manufacturers and professional services led modest gains in newly created jobs. the u.s. government, they sold their last shares of general motors. taxpayers taking roughly $10 billion loss on the funds that treasury sank into the auto maker back in 2009. the government exit, though, does allow gm to pay dividends and escape pay counts. snow and frigid temperatures making business a struggle over the last few days. if you're looking for relief today, you'll have to hold your breath a little longer. alex wilson joins us with more. and looks like a mess in many parts of the country today. >> yeah, becky. and the i-95 corridor where things are tricky right now. washington up toward baltimore. we've seen some of the heavier snow rates north of that line where you see that rain change

over to snow. around the new york city area, as well. as we go through the rest of the morning, lunchtime going to be snowy for a lot of the big cities, new york, philadelphia, boston included. look at what happens by the time we get to that late-day commute. 4:00, 5:00, things are dry. still some lingering snow showers through the evening in boston. and through tonight into tomorrow, we'll keep lake effect snow showers into parts of new york and new england. but the i-95 corridor will be quieting down. still, though, we've got winter weather advisories and winter storm warnings posted for a lot of these areas. and as far as snowfall goes, could be looking at 3 to 5 inches from d.c. to philly, close to new york, probably 1 to 3 there, though. back to you guys. >> thanks, alex. coming up, ceo of brookstone, plus lululemon in the headlines today. the company embroiled in a bit of a controversy over the recall

of the black yoga pants that were too sheer. saying it's not the pants, it's the person. we'll speak to a retail analyst about the future of lululemon. and a reminder, get a leg up on the trading day. you can go to our page at squawk.cnbc.com. sign up for today's top stories, news and water cooler stories we'll be talking about here on "squawk." we're back in a moment. hmm. mm-hmm. [ engine revs ] ♪ [ male announcer ] oh what fun it is to ride. get the mercedes-benz on your wish list at the winter event going on now -- but hurry, the offers end december 31st. [ santa ] ho, ho, ho! [ male announcer ] lease the 2014 ml350 for $599 a month at your local mercedes-benz dealer.

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it is time to spice up your holiday shopping list this morning. and instead of settling for the tablets and sweaters, kick it up a notch. we've got brookstone unveiling the hot high-tech buys this holiday season. the company's ceo here onset with a couple of things i think i may want to go home with. what is this that -- before we get into the holiday. what is this you have on the table? >> so this is our latest app driven remote control car. this is rover revolution, brand new to the stores this week. it is a remote control vehicle that you're going to drive with your tablet, your iphone. it has two hd cameras on it, front facing and on the top will move around in the 360-degree fashion. it has a night view camera so you can take it in the dark, you can spy on the kids in the

house. and it actually has a two-way audio so you can talk to people in other rooms. >> and you have a drone version of this, as well, right? you guys sell one that goes in the air? >> we do sell a drone from parrot, it's a copter we've had on the market for years now. it's got an hd camera. you can stream video, share it socially. that's a product that has a $399 price point and extremely popular. >> how do you know the kids aren't going to spy on the parents? >> good question. >> what was that, again? >> doing yoga pose. >> called -- >> that's what it is. >> and it's got night vision too. >> can you make that thing drive? >> absolutely. >> can you get the camera on the iphone so you can see what he sees? >> camera moving around, we're going to look at ken there. smile for the camera, ken. and just driving it forward. i don't want to drive him around too much, probably bring him off the table here. >> cool.

>> what's the price on that? >> the rover revolution is $199. and then we have a tank-based version out last year, which is $119 price point. the new version for this year is incredibly faster than last year and has the addition of two cameras. so it's great for sharing social video, as well. you can link directly to youtube. >> tell me what this is. this is like a sand box here, this is low tech. you said you were coming in here with high-tech things. >> this is our product called saand, made of 98% sand and 2% polymer. you can cut into -- >> what if you have a cat? >> i'm not talking about the cat using it. >> going to use it as a litter box. >> that's what the table is for, joe. >> is this for my kids or me? >> for the kids and you. the kids will be using it for molding shapes. you can make anything with it, sculptures, creations, it'll never dry out. and adults, it's a stress

reliever. it's an incredible tactile feeling, it's not wet or sticky. very clean, yeah. >> go for it. it's kind of relaxing in its own kind of way. what is this, sir? we like this. this is for your drink. >> let's talk cocktails. >> yeah. >> this is our perfect drink maker. what have we've done is taken the tablet experience and brought it into the bartender for the novice. you're going to hook up the scale to your tablet and it's got an app with a whole bunch of different drink recipes. 250 different recipes. the fun, though, is that the scale is measuring realtime the ingredients that you're pouring. you're going to watch the level of the beverage rise on the screen so you get an exact proportion. >> we've got to get -- what's this thing cost? >> the perfect drink is $69.99. >> and what is this? this is heavy, by the way. >> this is heavy. this is our premium bluetooth speaker, fully rechargeable. this product is the top of the line of the big blue audio, desk

top and portable versions, as well. this is a brand new -- it has five omni directional speakers. it's the best way to get the music out of your smartphone and out into -- out with your friends. >> most importantly, did you bring a nose hair clipper for joe? >> i did, actually. >> for his beak. >> and this year -- joe, you've got to hear this. >> you don't have one? >> this year is an enhancement called duo, it's got the nose and ear trimmer but also a side burn and eyebrow trimmer. >> i use the one i have for my eyebrows. >> the long ones. when you get older -- and becky, now, if i see that much ear hair because of some of our guests that have come on that we've looked at and talked about the furry hobbit type stuff. but i saw when they were this long. i said, you know what, i'm going to clean those up because you're

going to look over and i'm not going to be one of these -- but i love. is this innovative. did you bring it in here? >> it's in my bag right there. >> you don't have one on you? because it does happen as you get older. >> i'm not there yet. >> listen, guys -- >> we'll be doing a demo later in the program. >> the magic of brookstone, we've got gifts at all price points for all assortments. not just the groomers -- >> you don't have a honda jet. >> we don't have a honda jet, but we have pretty much the entire christmas list you may have. >> traffic -- >> these higher price points. >> so traffic is actually on an upswing. we had a fabulous black friday weekend in stores and online. >> these are higher price point items. >> they are higher price points. they're doing very well, actually. our audio line is on a very nice increase this year. and this product is hitting the stores this week. >> we've got to roll. thank you for coming in. >> all right. thank you, guys. >> happy holidays. >> when we come back, we'll talk

to a retail analyst who will talk about the controversy surrounding lululemon and the changing of the guard. and nerds unite. chris hardwick, host of "the talking dead" will join us. we'll talk entrepreneurs, social media and zombies. my mantra? family first. but with less energy, moodiness, and a low sex drive, i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron. the only underarm low t treatment that can restore

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welcome back to "squawk box," everyone. a memorial service for nelson mandela is wrapping up at this hour. nearly 100,000 mourners flooded the soccer stadium there. dignitaries and world leaders spoke including president obama. >> the scope of his accomplishments, the adoration he so rightly earned. it's temping, i think, to remember nelson mandela as an icon, smiling and serene, detached from the tawdry affairs of lesser men. but he strongly resisted such a lifeless portrait. a number of early stock movers this morning, pep boys disappointing the street. shares falling on the news it's down by about 12%. also carl icahn's firm says it

will sell dpeposidepository uni. and that stock is down, as well. down by about 10%. also, walmart named a new president and ceo of walmart international. david cheesewright will be replacing doug mcmillian who was named last month to succeed as the new ceo. also, lululemon will have a new chief executive come january. going to be joining lululemon. >> you were worried about it. >> i was worried about it. that's true. and the founder chip wilson will be stepping down as nonexecutive chairman. lululemon embroiled in a controversy over the black yoga pants because they were too sheer. and wilson himself found himself in hot waters over the comments suggesting it was the customers' body shapes you used the word,

ken, i won't, it's not the pants, it's you. joining us on the "squawk" line is pam quintilliano. what do you make of this move? >> people are viewing it favorably. the stock is reacting accordingly. and in response to chip stepping down as the chairman rather than the new ceo. even though people are relieved that a new ceo is in place as reminder christine day who is exiting. that was announced in june. we've been waiting a long time to hear about it. he's not going to have another impact from six to nine months anyway. but chip, obviously, i don't want to say rubbed people the wrong way -- >> does it matter? pam, we were talking about this earlier in the 6:00. there are certain types of clothes that -- i'm a taller guy, i should wear. it's no the the clothes' fault, it's my fault. >> i would like to say with lulu, the bottom line is the bottom line, people are wearing it for the fit.

and the fit is very attractive for a lot of people. but i don't think it's really impacting what's going to happen with the sales. i think that people are just making a bigger deal out of it. >> i think it's largely resolved. they have someone in place that's more in control of the facilities, manufacturing facilities. the problem before was a lot of things were getting caught. no one was paying attention to what was going on because people had too much of their plates and they separated out the role. >> the free market, about 2.3%, looking at $72 right now. what's your price target for the stock? >> our price target for the stock is $78. and we also want to say they are reporting this week and we do view it favorably they came out with this announcement ahead of the report versus kind of putting it in the day of the report.

we do think there'll be positive commentary there too. >> thank you. thank you, pam. let's get a shot of that prompter now. let's try this again, andrew. get a shot -- this is what we've resorted to for you, andrew. let's go slowly. >> pam quintilliano. i apologize for botching your name. >> we'll do that from now on. >> from now, it should be spelled out. go back to that, that was just wrong. look at that, pam quintilliano. >> can we do that for all the names? >> we've got to do something. >> we're going to get back to ken langone. i have a question for you, sir. you gave -- it was a fascinating conversation. a lot of e-mails -- >> i asked him a question. >> no, and i think what was so special about it, you really did represent the way so many americans feel. now, i'm going to ask you a

question about the way americans feel on a completely different topic. there's an article today in the times about hospitals in new york. >> right. >> the cost of hospitals in new york -- >> right. >> you are on the board of nyu. >> yes, sir. >> there's the langone medical center. >> yes, sir. >> okay. of all of the hospitals i could go to for a knee replacement surgery, for example, in the entire state of new york, the most expensive place to go is your hospital. the costs are the highest, they're the highest not just for the individual, but the highest for the government, the taxpayers who are on the hook for this stuff. >> how close are we to the other hospitals in price? >> not -- according to this piece, not so close. not so close. >> how about special surgery? >> you were charging $110,000 for knee surgery. the -- some of the lower prices in the state you can do this, by the way, for $12,000. you can do this for $11,000. there's a couple places doing it for $51,000, you're doing it for

$110,000. >> i think this was the median price, too. the point with the survey, we don't know what things cost us as consumers when we go to hospitals. and if you could strip out some of those things, consumers would be better able to shop around. >> if you look at the margins of hospitals across the board, they're not making much money. what's the reason? the reason is the cost of doing business in new york alone, okay. >> mm-hmm. >> that's staggering. but there's another thing that obama care completely ignored. tort reform. we live in a very, very well-endowed city for lawyers. we have lots and lots of lawyers. and believe it or not, the defensive medicine that's practiced across the whole medical profession is staggering. i may not need that tester -- look, i'm very proud of us being not only competitive but you mentioned us and i'm glad you brought it up, we were just

ranked number one in quality and safety. that doesn't come for nothing. you pay for that. how do you pay for it? by making sure you run your hospital in a way that you don't allow things to happen that can be adverse to the patient. >> let me ask you a question, would you be in favor of literally putting up a price list. like you're going to mcdonald's to say if you want the hip surgery, the knee surgery, you've got a cold coming, whatever it is, this is the cost. >> how about a complication once you go in? then you say, oops, sorry -- >> you say, look, this is what we're starting with, this is the additional fee but this is what we charged. >> remember this, as you said, most of the consumers don't know what they're costing. you can be sure the insurance companies that negotiate with us are tough. tough, tough. they will chase a woodpecker through hell for a pumpkin seed. >> you're against transparency?

>> i have no trouble with transparency as long as people understand there could be complications and unfound conditions, unknown conditions that are going to complicate the process. >> sure. >> but if you're going to have a bullet point, if you can be convinced that the consumer or insurance company understood that there are variables that you have no control over and might be unforeseen. >> i think part of the problem, when you have medicare coming in and negotiating. a lot of times, they're paying below what it costs the hospitals so other insureds end up paying more. >> of course. >> do you think you run that hospital like a business? >> absolutely. >> do you think there's anything you could cut to make it more efficient? >> i'm proud. we look every single day for ways to run our business better and smarter. >> okay. >> but most importantly of all, for the benefit of the patient, what you never want to compromise on is safety -- >> right. >> and quality of care.

those are the -- every time i meet with the doctor, our number one thing is what's best for the patient. that's why we're there. all you have to do is see why am i raising money philanthropically. by the way, my latest project, st. patrick's cathedral, $175 million restoration, 150 years old, never been done before and now it's better. half my time begging for money. but we're getting there. st. pats is the third most visited tourist attraction in new york city. >> all right. >> we're going to continue this. we'll have more on the state of the economy. also, a quick programming note for you. cnbc is live at the goldman sachs financial services conference today. guests include ken jacobs, william rogers, the ceo of suntrust, and william conway. from the "squawk dead" to

"talking dead," chris hardwick joins us to talk zombies, social media and his new show "at midnight" coming up right here on "squawk box." in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. ♪ [ male announcer ] 1.21 gigawatts.

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"squawking dead." our next guest wears many hosts from television host, writer, comedian, entrepreneur to multi-talented nerd icon. joining us onset is chris hardwick, host of amc's hit aftershow "talking dead" and "at midnight." he's also a founder and chief creative officer of nerdist, a website i talked about with my son. we're a nerd household. and you've got comic books there, video games, you've got a video game sweater on. >> i was just trying to spruce it up a little bit because it's -- the weather's really crappy outside right now. >> it is. >> i saw a lot of ties in here. and i said, you know, today is going to be festive video game sweater day. >> you wear a tie on your show, but to come to the business show, you don't wear a tie. >> you know why? this is casual tuesday for me. this is -- i'm coming on cnbc -- it's casual -- casual's going to

be the "c" in cnbc. >> if calling you ryan seacrest wasn't sort of kind -- i wouldn't want to be called ryan seacrest. you make fun of him. but in terms of all of this stuff going on that eventually makes about $100 million a year for you. you seem like you're on your way. >> i like ryan. he's -- i guess i'm sort of like his nerdy older brother, i don't know. but we do occupy due to slightly different spheres. i'm the non-kardashian related spheres. which for me is a nice place to be. >> you're a stand-up. >> yeah. >> to go over everything you're doing. number one. >> yes, sir. >> "walking dead's" popular, 18 to 49, i think it beats some football games that are very near and dear to nbc. does almost as well as that and in terms of -- and then "the talking dead" comes out and a show about a show does higher numbers than most dramas on most of the major networks. more than family guy. >> well, i would love to say,

oh, that is not a surprise to me, but it was a complete surprise to us it was going to work out that way. but i think what we provide for people is shows like "walking dead" or "breaking bad." there's so many characters and so much -- the drama's dense. i think a show like ours sort of magically, it's like therapy so people can come back into their lives. it's an isolated version of the water cooler where it's like, oh, we can talk it out. >> unbelievably illustrated that point when herschel -- when -- >> you're caught up. >> there are other people that aren't. >> in cold blood, what a performance in cold blood. amazing. >> scott wilson. >> and people saw what happened to him. i won't say what happened to him, although, charlie -- i do have a sword, the collector's edition. he gave me a sword which worked twice that night. >> i'm not going to say what happened to herschel if you haven't seen it yet -- >> it involves a sword. >> and there's no more spaghetti

tuesdays. >> right. but it was cathartic. the actress that came on, she was crying. anybody who plays herschel's daughter was crying. people in the audience were crying. you, i swear you were kind of emotional. >> i was misty a little bit because you get very invested in these characters. so when things happen to them, it's that feeling where you watch the show and you get caught up and afterwards you're like -- so many feels to process. and so that's what we do for people. not only do we allow people to sort of process what they're feeling but then also allow the actors to come on -- >> they're there too. the governor came on that night. >> do you get to see the show before? how many times do you see it before you do your show? >> here's the thing, i have all of the episodes in advance, but i only watch it week to week. three hours before the show airs. >> do you take notes? >> i don't take notes. it's the silliest job to have. i talk about it. it's like the movie "big." you mean, you play with this

stuff? yeah, it's crazy. >> i'm challenged with the social stuff. and this is my -- but i learned a lot preparing -- watching "at midnight." >> oh, thanks. >> i got picked up for -- >> you came in this morning that number sign thing. >> yeah. >> hashtag. >> you know about stocks, you talked about $26, and you went on some obscene things you could buy besides twitter on the ipo. >> yeah. >> and so that's going to be on four nights a week now. >> yes, we did a month, comedy central gave us a month. and the pairing was as executive producer myself and funny or die and tom lennon -- >> it's almost like a game show with three funny comedians and it's social media. >> in england, they have these types of panel shows and that's what it is. a panel show disguised as a game show. it's not a real game show but

using the structure to comb through any social media. not just twitter, but yelp comments and google plus. anywhere where there's a social -- >> i'm trying to bone up on mine. you've got to watch this. i'm a little bit challenged with social media. it's helping. i can't believe you can do a whole show about it. >> we can. essentially the internet is theoretically almost infinite with the stuff we can pull through. so, yeah, it's just -- and it's just putting comics on and allowing them to be funny about stuff we find on social media. >> and your billion dollar -- i'm valuing nerdists at $1 billion. >> now, that valuation stands because this is "squawk box." that's an official -- >> that's your podcast, which is also something that we worry about. >> you're worried about podcasts? >> cord cutters, podcasts. when people don't pay cable bills, we don't like that. >> ten years from now, this is a business prediction, are people going to be watching tv or doing

it online? >> well, i'm hoping that everyone will essentially have matrix-style, but they'll be wireless, just jacked in the back of their necks and we can absorb all the sum total of human knowledge. >> we have breaking news on -- i almost said the -- i almost said the shih tzu word, but i didn't. i'll be seeing you on "talking dead," but phil lebeau's on the phone with breaking news about general motors. phil? >> guys, this is huge news from general motors. the company has designated mary berra as the next ceo succeeding dan ackerson. currently the head of product development worldwide for general motors, a veteran of the company. and the significance of this cannot be overstated. for years, decades, the auto industry has been pretty much accurately portrayed as an old boys club. and if you're a car guy -- and while there have been women who have risen through the ranks as

many automakers and mary barra up until was on the high end of a female auto industry executive. and she'll be theceo, ceo of the world's largest automaker or close to the world's largest automaker depending how you count the sales in china, mary barra will be the next ceo of general motors. >> this is really big news. the street has been trying to figure out who the next ceo would be. mary was considered one of the contends are for this job. for car development, this is a very big position. before that she was in human resources. that doesn't give her justice for everything she's done in her career. she's reason a pla-- run a plan one time, she's an engineer. >> more importantly, she is highly respected.

in is not going to be a d designation where a good chunk of the men will say she only got it because she's a woman. mary will be getting this job because she earned this job. >> phil, when is this going to happen? >> we have not gotten the exact timing on this. i would not be surprised if we see a transition by next year, the second half of next year. last time i talked with dan akerson, he made it clear he was enjoying his job there but he would not be there forever. >> mary barra, the first time a woman has been named to head one of these car companies. let's get to the new york stock exchange. jim cramer is standing by. jim, what do you think of this news? obviously the role she has will be very difficult.

she has to make sure they're still building exciting cars while they're slashing costs along the baseline. eig it's a tough thing to do. can they pull it off? >> yeah. this company has the most momentum of the companies that i follow, with the exception of the german choice. gm like ford, too many brands, too many different ways to manufacture. you can cut costs if you make it one way to manufacture. i think that's been one of her secrets. under her watch the impala came out. i think it's just one more great thing. >> we're running through trying to look at all these this evenings -- things today. she has done every job down the line. went to hr.

when she was there it was her responsibility to get rid of things like dress codes and slim down the guidelines and rules, to make it more about streamlining the company. i interviewed her about a month a ago. she said her goal was to change the culture at gm. sounds like she's already done a lot of work about that. >> does she strike you as someone who can stand up against entrenched interests? >> i think so. that was her role when she was in h.r. that was her role, streamlining the culture, standing up against some of those things. i think it's a great thing. >> this stock is one of the hot that's i follow. certainly they've got much more momentum than ford. the market just ate it up as if it was aig in the mid 30s.

gm goes higher. >> does anyone else think cramer should play louie c.k.'s frat guy older brother? >> see what i'm saying? >> or is it just me? >> coming up, we have more on the gm news and we'll check the futures when we come back. every day we're working to be an even better company -

and to keep our commitments. and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger.

we got to go. ken langone, thanks for joining us. >> merry christmas and happy holiday. merry christmas. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. the automaker gm to name mary bb barra. if february of 2011 she became basicath